AG calls for second look at convention centre

Premier Darrell Dexter responds to questions on auditor general Jacques Lapointe's report released Wednesday in Halifax. Lapointe told reporters that the government should have ordered an independent second opinion on the proposed convention centre. (ANDREW VAUGHAN / The Canadian Press)

UPDATE 7:58 p.m. Wednesday

The province’s auditor general has called for an independent study into Trade Centre Ltd.’s long-term financial forecast of the proposed convention centre.

But the NDP government has rejected the recommendation even though the opposition parties have thrown their support behind it.

The 10-year market projections used to justify the business case for the centre do not appear to have undergone the level of scrutiny he expected, Jacques Lapointe said in a damaging report he released Wednesday.

“Important industry realities, such as an excess supply of convention centre space, new competitors and a stagnant convention centre market, have not been adequately considered and assessed,” the audit found.

“We expected a much more comprehensive analysis supporting such aggressive growth targets than what was performed.”

The three levels of government have jointly committed $163 million to the project, part of the Nova Centre to be built in downtown Halifax by Rank Inc.

Trade Centre Ltd. released a forecast in June 2010 that predicted $754 million in spending, spread over 10 years, from convention centre visitors. It also projected that the number of international visitors would more than triple in a decade, while corporate national attendance would grow by more than five times.

But Lapointe said the forecast assumes the growth in international convention centre visitors will match the rate that existed between 1999 and 2008.

The figures are also based on Halifax attracting as much business as Ottawa, Montreal, and Quebec City when competing for national group attendance. But the audit says it is unclear how the provincial Crown corporation plans to carve out an equal share of the market for itself, especially with increasing competition from universities and hotels.

“This is a risky assumption without a detailed assessment of potential competitors and other factors influencing destination decisions,” the auditor general said in the report.

“If the number of visitors expected and resulting direct expenditures are inaccurate, the expected economic impact will likely be inaccurate as well.”

While Lapointe would not comment on the viability of the convention centre, he emphasized that even a 10 per cent drop in the forecast would translate into $75 million less in spending over a decade.

Premier Darrell Dexter, however, said the Crown corporation’s figures came from eight separate studies and because of that, the government doesn’t see the need for another review.

“Those studies were ... based on information that came about independent of the Trade Centre by respected market analysis companies,” Dexter told reporters at Province House.

“So I have no reason to disbelieve those projections.”

While the opposition parties said they continue to support the convention centre, the Liberals and Tories said they back Lapointe’s call for another study.

Ignoring the auditor general’s findings could erode public support in the taxpayer-funded project, said Liberal MLA Andrew Younger.

“If the government wants the public to be behind the convention centre then they need to have data that is (defensible),” the public accounts committee member said.

Progressive Conservative Leader Jamie Baillie said he supports the call for an independent review because people expect that a government will do its “homework before it makes major commitments.”

“The auditor general is pointing to the need for an independent analysis of the Trade Centre and I think that’s an important improvement to the way this government makes decisions.”

The call for an arms-length probe into the projected figures was one of 20 recommendations contained in an audit of the Crown corporation that also revealed flaws in its internal financial controls.

Lapointe found a chronic issue with missing documents, those used to explain policy decisions and day-to-day financial transactions.

Trade Centre also violated the province’s travel expense policy, with credit card receipts being filed without an itemized bill and explanation, the auditor said.

And Lapointe questioned how Trade Centre Ltd. splits its expenses with Halifax Metro Centre, which it operates for Halifax Regional Municipality.

For employees who work for both organizations, their salaries are split between the two, however, there was no documentation supporting that decision, according to the report.

The corporation is working out a new operating agreement for the Metro Centre with the municipality, which should cover the issue of shared services and salaries, said Trade Centre CEO Scott Ferguson.

The corporation has already adopted 12 of the auditor general’s recommendations. The remaining ones will be addressed by the end of the fiscal year, Ferguson said.

The CEO said he has confidence in the convention centre forecast, which was based on several studies that support the business case.

“I feel that we’ve provided a significant amount of background to those projections,” he said. “I’ve been in this business for 27 years. I feel that we know our customers, we know the market and we clearly know the attractiveness of our destination.

“I expect to be held accountable and I expect to deliver on those projections.”